India's bellwether information technology company Infosys announced its first quarter results on Friday reporting 16.9% growth in its revenues year-on-year. The company earned a revenue of Rs 16,782 crore but its net profits stood at Rs 3,436 crore – lower than analysts' expectations.
The results triggered sharp selloff in the markets as investors changed their positions and decided to take their money elsewhere, forcing the company's stock price to come down by a massive 10% on Friday afternoon. The company's Chief Executive Officer Vishal Sikka (pictured above) said he was "disappointed" with the Q1 performance and added that the company will be revising its earning target downwards for the financial year ending March 2017.
"I'm disappointed with the revenue performance in Q1... I had expected that we would do better than this," Sikka was quoted as saying by NDTV Profit.
Sikka added that Britain's exit from the European Union has increased uncertainty about the company's business outside the country, forcing it to revise its revenue expectations downwards. While Infosys was earlier expecting to post a revenue growth of 11.5-13.5% this year, it now expects the revenue to grow by 10%-12% in constant currency terms.
"As we look ahead to the future clearly (Brexit) is something that many banks are worried about and so forth," Sikka said. "In the near term we don't know how this will play out and so forth. So, given the visibility we lowered our guidance."
Sikka added that the low revenue was because of "unanticipated headwinds", such as increased spending on consulting projects and slower wrap of ongoing projects from the past few quarters.
Meanwhile, the company is also facing an attrition crisis as the annualised rate of employees leaving it jumped to 21% in this quarter as compared to the 17.3% in the quarter that ended March, 2016.